Rafi Farber: Gold Rallied 80 In Two Years The Last Time This Happened

Quick reminder, the endgame investor is now on substack at endgameinvestor substack. com. You can subscribe there for free. You can also be my patron for as little as $3 a month, where I cover biblical lessons on the monetary situation. And I did find a source for next week’s video on how the final kingdom, whatever that means, will use a paper money. I actually found the source. I’ve been looking for it and I’m excited to report on it.

I’m not sure what it means, but it’s there and I want to talk about it anyway. In this week’s silver report, we’re going to focus primarily on gold. Gold is in a situation it has not been since late 2018, when it began a nearly 100% rally. From late 2018 to August 2020, 53. 6% of the total comics gold stockpiles have been drained out since silver squeeze, and twice that.

More than twice that amount has been squeezed out of all gold funds since silver squeeze. Gold in 1950, $9 in uninflated dollars is still $42. 22. And I’ll show you the chart that one of my subscribers cooked up for me. A physicist actually shows that in uninflated dollars, if you take out the actual inflationary factor, gold is still what it is statutorily at $42. 22. People have been making a big deal about long term rates lately.

But if you look at long term rates, ten year rates, treasury rates from 2020 to now, you’ll see that we’ve just been bouncing off. The 50 week moving average is very similar to what we saw in the late 1970s, when after the final bounce, we headed vertical to about a 20% interest rate. I’m going to show you two times in the past, once in the 1940s and once in the 1970s, where we had two price inflationary waves, what they call inflation, what I call rising prices, two waves of rising consumer prices.

The second wave was always more intense than the first, and there was a 24 month lull in those two periods in the 1940s and 1970s, and we could be going through the same thing. Now, the fact that there has been a lull in consumer price inflation is not an anomaly. It is normal when you’re dealing with complex systems like this. This week’silver report is brought to you by Fortuna silver mine, symbol FSM.

Going to take a look at their proven and probable mineral reserves for 2023. This is a press release that just came out last week. So we see here their proportion of silver to gold. You see here silver is 9. 8. This is in millions of ounces. So 9. 8 millionoz versus gold, which is 2000 691,000oz, which is 2. 7 millionoz. So if you take the ratio here, just so you have an idea of whether they are gold focused or silver focused, this gives you a good impression.

If we take 2. 7 divided by 9. 8, that’s about 3. 6. So it’s about 3. 6 to one, favoring silver over gold. 3. 6 to one really favors gold in terms of revenue. Because even if we get to a 15 to one ratio of gold to silver, which I think we will in the end game, we’re still at only a three to one ratio of silver ounces to gold ounces here.

So this is heavily favored by about five times in favor of gold, even at a 15 to one ratio. So Fortuna silver mines is more accurately now. Fortuna gold and silver mines. We see here similar ratios in measured and indicated. This is 9. 9 million to 888,009. 9 millionoz of silver to 888,000 measured and indicated ounces. And for inferred, we have 19. 3 millionoz of silver versus 1 millionoz of gold.

At a 15 to one ratio, that would be about even. But I don’t expect to stay at a 15 one ratio that long. Fortuna silver mines. Really. Fortuna gold and silver mines. And with that, we will continue with this week’s silver report for Arcadia Economics. Beginning with the current situation we are in in the gold futures market, we haven’t seen this since late 2018. And before that, we haven’t seen it at all during the current gold bull market that began in late December 2015.

So this I went over briefly last week. We’re going to go over it again because open interest has fallen even further since last week, putting us in a situation where we haven’t been since late 2018. If you look here, it’s hard to see here, but focus in a little bit. If you can see it, you see here in this rectangle. This is back when open interest, the number of contracts open on the Comex was where we are now, 407,000.

I think it’s like 408,000 now. It’s something very close to this. This is one one day delay, two days by the time you’re seeing this. So here we have, I think this is open interest of exactly 400,000 in late 2018. If I zoomed in in a different chart, but you’ll see here a little bit of a sell off in gold in around November 2019 with this little sell off in this little bottom over here that led to a giant waterfall decline in open contracts, and we hit that 400,000 level.

So a minor sell off leads to a big closing of contracts. Waterfall. And we have a low here. And from that point, we were just below 1200, and we hit a high of about 2100. Just below 200. Let’s say 2090. That’s about 100% move. It’s a little bit less. But the point is, once you have open interest numbers this low in a bull market, it signals a lot of fuel for a very big rally.

And this was the biggest rally we have had in this bull market. The biggest, longest, and most sustained, about 100%. I don’t know when this rally exactly is going to begin, but we have the fuel for it to last long when it does, and we will see how much lower we can go in open interest. But we see that the low open interest, these contracts closing, has not affected price that much.

We have a very brief rally here from 2000 in the last few weeks. You can see at the end of this chart. And open interest has just fallen since then. So we might be at a bottom of price by about $2,000 here. Could be the floor. I don’t know for sure, but this looks to be very strong. Potential. Rally coming when it begins is another question. But the fuel is definitely there.

Judging by these open interest numbers, that means very, very low interest in gold derivatives. Why is that? I believe it is because the demand for dollars is going higher as the final financial crisis dollar crunch comes upon us. Quick look at what’s been going on in the Comex. I haven’t reported on this a while. I don’t follow it actively that much, but I do check in every few months and I’ve checked in recently and this is what I found.

So the gold supplies in the Comex continue to fall since silver squeeze. We’ve fallen. Here are the calculations I made in the last three years. We fell 21. 26 millionoz. This is eligible and registered all the physical gold. This is the actual stuff that’s in the vaults. So 53. 6% of the supply has been drained out. That’s over half in the last three years. In the last 22 months, it was about 50%.

So half in 22 months. At this rate, in the next 22 months, it’s empty. I don’t know what exactly is going to happen, because we’ve been saying that for a long time, but this is just for tracking. So in the last nine months, we’ve drained 5 millionoz. That’s 21%. In the last two months, it’s been 2. 6 millionoz. So this has been a very quick, very fast drain here since around December 2023.

The last two and a half months or so, the drain in gold continues. And it’s not just in the comics. It’s across all funds. See here, the blue line? This is across all transparent gold funds. We have fallen about 45 millionoz since silver squeezed that line over here. And if you take Comex as part of this, Comex is responsible for about half of it, for 21. 26 millionoz, or a little bit less than half.

But it’s not just Comex. Gold is being drained from all paper funds. I think it’s going into a combination of central banks and private stackers. It’s a race between the central banks and us. I don’t want them to win, and they won’t win, because they’ll have to sell their gold anyway when their continents collapse, which is close at hand. This is a chart that was given to me that was configured for me by a longtime subscriber to the Endgame investor, a genius man, a physicist.

And he was able to calculate gold’s price in 1950, $9. I don’t believe in the accuracy of filtering out inflation from all types of consumer goods, because inflation affects different things differently in different proportions. But I do believe you can filter it out of money itself, because it is the money itself that’s being inflated. It’s the money supply, the currency as a gold derivative that is being inflated.

So if you take out the inflation from gold itself, this is on a scale of 1959 normalized dollars, gold ounces in dollar terms. So we see here that usually this is the $35 mark. This is where FDR put gold in 1933, or his treasury guys, or whoever it was. And every so often, it does get out of control. So we saw here that golden real terms launched to $250 an ounce above the $35 an ounce mark that it was in 1933.

After that, the Fed got control of the market again. And because of high interest rates that were in principle payable back in 1980, that are not payable now. Not even close. This triangle started to descend, and we went back towards the $35 line by 1997, went below it even in 2000. So in real terms, gold was below $35 from around 2000 to 2006. And then we had the 2008 financial crisis and then the 2011 top here, which established our triangle.

And here we can see here that this is where we are now. And we’re just about to touch the triangle here. Again. If we go to the next chart, we can get a close up of what’s going on where gold is in real terms in 1950, $9. And look at that. The last data point we have is the beginning of 2024, and we were at about $42. 22, which is where Nixon left it off in 1973 after he gave up trying to repeg the dollar to gold in that year.

We are now in year 51 or year 50. Year 51 will be in August 1973. I believe we’re in the jubilee. I hope this will be the last year. We’ll see what happens. This can be excruciating, but it is logically it must happen. So we’ll see if we can get above. This is the triangle line. If we can break through this, we can break through this 1980 triangle and really get to scary heights in the gold.

And by extension, of course, the silver market, which will become unhinged from gold and approach a 15 to one ratio. A lot of people have been making a big deal about rates that have descended long term. Rates have descended from about 5% to 3. 75%. And yes, this has happened. But in context, if we go back to 2020, we can see that the bear market and bonds, or the bull market and yields, if you want to call it that, is well intact.

Using the 50 week moving average as a bouncing floor here, we see that we’ve hit it 1234 times. This is the fourth time. And just like the other three times, we have bounced off it and we’re on our way up again in rates. Now, we can compare this to what happened in the 1970s on this chart. So I’ve put the same chart. Ten year rates versus the 50 week moving average in rates in the 1970s.

So the bear market in bonds here looks like it began in 1971, exactly when Nixon closed the gold window. So we have 1971 a low in yields, and from 1972 to about 1976, we have a rise in yields. And we actually slipped below the 50 week moving average for a while here. For about two years. Until 1978, it was again support here until we reached the top in 1980.

So, technically speaking, this bond bear market is even stronger than the most bearish bond bear market we’ve ever seen, from 1971 to 1980. It goes even before that. But let’s just call it from 1971. On this chart, rates are doing what they should be expected to do in an ongoing bear market for bonds. Nothing out of the ordinary here. Let’s go to the second wave of inflation, the 1940s versus the 1970s versus.

Now, we’ve seen this before, where we have a strong wave of price inflation, what they call, what the key indians call inflation, what I call rising prices, what normal people call rising prices. But there are very few normal people these days. We had here in the 1940s, a 24 month low. We had a first wave over here from the outbreak of World War II, when it really started affecting the prices from, let’s say, what is that? 1941, late 1941 to.

Yeah, that’s when Pearl harbor broke out and the United States entered World War II. I wasn’t alive at that point, so I didn’t enter anything. So from 1942 to 1944, I think this is May 1942 to May 1944. So it’s exactly a 24 month lull, a lull in price inflation. And then we began a second wave. I think that price controls were what were causing constant price inflation here, a constant rate, because we had price controls here, which didn’t really work, but it did finagle the statistics.

And then we had an explosion in consumer price inflation with the end of World War II, and it took some time for production to ramp up again. But anyway, we had two waves here, and the second wave was more intense than the first wave. Now, in the 1970s, you saw something very, very similar. This is December 1974. December 1974, we hit a high in price inflation of about twelve point 112.

2%, whatever it was. And then 24 months later, exactly in December 1976, we hit a low, just about 4%, maybe 4. 55%, something like that. And then we had a second wave of consumer price inflation that was even stronger than the first after a 24 month lull, three. Now, this is what we have now, right? We have the first wave of inflation. This is post Covid here. And we have the first wave of inflation going up here from about March 2020 to June 2022.

So far, we have had a 19 month lull in consumer price inflation that has been descending on an annual basis. It doesn’t have to reach 24 months exactly. There’s no exact science here. There are no constants in human action like that. And why are there two waves in price inflation? Well, it takes time for money that is printed to go out into the economy, and it goes out in waves.

And the second wave is already upon us. And given that the second wave is already upon us, I don’t think we are going any lower in the CPI. And if we are not going any lower in the annualized CPI, as cockamamie as that. What kind of word is that? As cockamamie as the CPI is, and how manipulated it is, it still shows trends. And since we are not going down in the CPI, then I don’t believe the Fed will be able to cut at all until it is forced to by a financial crisis.

And it is that final crisis that will cause the final slingshot in the gold and silver markets. And at that point, we will not be able to get in anymore. And in my humble opinion, the final rally in the real money metals will be so intense that it will scare even those of us that are true believers, because we’ll know what’s going on, and we’ll know what happens to society when gold and silver can no longer be exchanged back into the local derivative anymore.

It means that the entire division of labor has to be restructured, which is a good thing, but it is a very painful thing. And we will see how many people are in the wrong place in this division of labor, which makes absolutely no sense. And it has to come to an end, and it will come to an end when the currency dies and real money reestablishes itself at the bottom of the pyramid.

This is Rafi of the endgame investor with this week’s silver report for Arcadia Economics, and I’ll see you guys next week. .

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